3 Reasons Why HK is the Best Place for Offshore Company Formation
Hong Kong is amongst one of the most popular places in the world for offshore company formation simply due to its low and simple tax regime. Many foreigners are attracted to Hong Kong because of its unique geopolitical location to serve as a gateway to endless business opportunities in China. And since Hong Kong adopts the common law system, many foreigners prefer to incorporate their companies in Hong Kong because they feel that they will be better protected under those laws. This article will tell you exactly why Hong Kong is considered the best place for offshore company formation and hopefully you will be encouraged to incorporate in Hong Kong after reading this article.
Low and Simple Tax Regime
Hong Kong is known being a tax heaven with a relatively low, simple and competitive taxation policy in which profit tax is only at 8.25% for the fist 2 million Hong Kong Dollar in profit, for any profits beyond that, it is at 16.5%. In addition to that, Hong Kong has long been regarded as a free trade port ever since the 19th century as there is no tariff quotas imposed, no sales tax or value added tax (VAT), no withholding tax on dividends and interests, no capital gains tax (CAT), no tax on dividends, no estate tax, no goods and service tax (GST) and no customs fees on imports and exports.
With that being said, with Hong Kong being a free trade port, its free port status and relatively simple custom policy makes it easier to do business with almost every country in the world. Moreover, it is based on a matter of fact to claim 0% tax offshore status. You must be able to show proof to the Hong Kong government that your company does not have any customers, employees, business operations or suppliers in Hong Kong. The Hong Kong government will ask for your company to file a tax form and audit report 18 months after your company is incorporated.
One Country, Two Systems
Hong Kong is a vibrant city filled with excitement and opportunities that is situated in the centre of Asia in which there is an interesting cultural balance where the east meets west. Due to having an unique historical background, Hong Kong had been a colony of the United Kingdom from 1841 until 1997, spanning over a century and a half. The British had introduced the common law system to Hong Kong ever since its takeover and had developed the city as a significant financial hub with rule of law that very few places in Asia could match.
Ever since the handover of Hong Kong to the Chinese government in 1997, Hong Kong has been able to operate independently as a special administrative region of China, adopting the common law system until this day, to maintain status quo so it can constantly attract foreign investments. Unlike Singapore, where you must have at least one Singaporean national to be the company’s director, there is no such requirement in Hong Kong. Just about anyone from any country is allowed to incorporate a company here, the incorporation process can be done completely online as fast as 1 day.
Cultural Diversity
Although almost 90% of the Hong Kong population are Chinese, it is nonetheless still a global city gathered with people from all over the world. An estimation of 2.7% (over 100,000 people) and roughly around 1.9% (over 100,000 people) of the population are from the Philippines and Indonesia respectively due to a constant high demand of labourers and domestic helpers in Hong Kong. Not to mention, the south Asian diaspora (India, Pakistan and Nepal) make up of about 1% of the population as many of them have been living in Hong Kong for generations. Furthermore, there are many foreign expats that reside in Hong Kong which make up of around 3% of the total population.
Hong Kong is an international city where you can find restaurants of almost any cuisine possible as well as an energetic night-life scene. The city celebrates both traditional Chinese festivals such as Lunar New Year, Mid-Autumn Festival and Dragon Boat Festival together with Western festivals like Good Friday and Christmas. All of them are listed as public holidays in Hong Kong.
We hope this article helps you learn more about Hong Kong! If you have further questions or would like to form a company with us, please do not hesitate to contact us via email at info@cheapincorp.com or message us at +852 5404 0902 on WhatsApp.